Condensed Interim Financial Statements

Transcription

1 Group Condensed Interim Financial Statements January 1 to March 31, 2018 Landsvirkjun Háaleitisbraut Reykjavik Iceland Reg. no

2 Contents Key Figures, Management's Presentation of the Operation of Landsvirkjun... Endorsement and Statement of the Board of Directors and CEO... Income Statement... Statement of Comprehensive Income... Balance Sheet... Statement of Equity... Statement of Cash Flows... Notes Consolidated Interim Financial Statements of Landsvirkjun, March 31,

3 Key figures Management s presentation of the operation of Landsvirkjun Amounts are in USD thousand Operation Operating revenues , , , , ,638 Realised aluminium hedges... ( 1,648) ( 653) 1,209 2,290 3,408 Total operating revenues , , , , ,046 Operating and maintainance expenses... ( 35,893) ( 30,544) ( 23,296) ( 22,410) ( 22,458) EBITDA ,269 88,268 82,207 89,255 82,588 Depreciation and impairment loss... ( 30,623) ( 29,180) ( 29,273) ( 27,573) ( 27,416) EBIT... 74,646 59,088 52,934 61,682 55,172 Financial items... ( 18,720) ( 15,307) ( 15,108) ( 9,655) ( 21,066) Profit before unrealised financial items... 55,926 43,781 37,826 52,027 34,106 Unrealised financial items: Fair value changes in embedded derivatives... ( 39,556) 42,555 ( 3,809) ( 4,679) ( 32,568) Fair value changes in other derivatives... 16,879 ( 8,110) ( 155) ( 7,306) ( 1,231) Unrealised foreign exchange difference... ( 18,856) ( 3,568) ( 26,896) 44,791 2,196 ( 41,533) 30,877 ( 30,860) 32,806 ( 31,603) Profit before income tax... 14,393 74,658 6,966 84,833 2,503 Income tax... ( 5,328) ( 25,277) ( 3,522) ( 29,253) 75 Profit for the period... 9,065 49,381 3,444 55,580 2,578 Balance sheet Total assets... 4,712,186 4,472,638 4,261,913 4,202,682 4,496,933 Total equity... 2,072,166 2,017,992 1,920,232 1,746,998 1,663,121 Total liabilities... 2,640,020 2,454,646 2,341,681 2,455,684 2,833,812 Net debt*... 2,038,072 1,965,833 1,974,816 2,028,575 2,403,087 Cash flow Funds from operation (FFO)... 85,030 70,900 66,477 69,423 66,502 Cash flow from operating activities... 81,142 66,285 68,711 82,850 69,046 Investing activities... ( 42,582) ( 67,732) ( 22,248) ( 14,403) ( 51,853) Financing activities ,679 95,757 ( 64,717) ( 52,293) ( 80,923) Liquidity Cash and cash equivalents , , , , ,877 Undrawn loans , , , , ,529 Total liquidity , , , , ,406 Key ratios Return on equity **... Equity ratio... Interest cover (EBITDA/net interest exp)**... FFO / net debt**... FFO / interest expense**... Net debt / EBITDA** % 5.9% 1.8% 7.9% ( 0.3)% 44.0% 45.1% 45.1% 41.6% 37.0% 5.55x 5.26x 4.68x 4.05x 3.57x 14.6% 12.2% 12.0% 12.9% 10.4% 4.36x 3.89x 3.38x 3.00x 2.67x 5.62x 6.39x 6.28x 5.99x 7.42x Credit rating without state guarantee at the end of March Standard & Poor's... BBB BBB BBB BB BB Moody's... Baa2 Baa3 Ba1 Ba2 Ba2 * Net debt is interest bearing liabilities less cash and cash equivalent ** Key ratios based on the past 12 months Consolidated Interim Financial Statements of Landsvirkjun, March 31,

4 Endorsement and Statement of the Board of Directors and CEO Landsvirkjun s objective is to operate in the energy sector and to engage in other business and financial operations according to the decision of the Board of Directors at each time. The Company s condensed consolidated financial statements in the period from January 1 to March are prepared in accordance with IAS 34 Interim Financial Reporting and additional requirements in the Icelandic Financial Statement Act and include, in addition to the parent company, four subsidiaries, Landsnet hf., Orkufjarskipti hf., Icelandic Power Insurance Ltd. and Landsvirkjun Power ehf. The interim financial statements have not been audited or reviewed by the Company's auditors. According to the income statement, the Group's profit in the period from January to March 2018 amounted to USD 9.1 million while during the same period in 2017 the Group's profit amounted to USD 49.4 million. The change between periods is USD 40.3 million, mainly due to the fair value loss of derivatives, which amounted to USD 22.7 million during the period January to March 2018 compared to a positive difference of USD 34.4 million during the same period in the previous year and negative currency exchange difference, which amounted to USD 18.7 million compared to a negative difference in the amount of USD 3.8 million during the same period in The Group's operating revenues amounted to USD million during the period compared to USD million during the same period in the previous year. Cash flow from operations amounted to USD 81.1 million during the period compared to USD 66.3 million during the same period in the previous year. At the end of March 2018, the Group's cash and cash equivalents amounted to USD million and undrawn loans amounted to USD million, a total of USD million. The Group's equity at the end of March amounted to USD 2,072.2 million according to the balance sheet compared to USD 2,063.1 million at year end At the annual general meeting at April 10, 2018 the payment of dividends to owners in the amount of ISK 1.5 billion or USD 15.2 million was approved. Statement by the Board of Directors and the CEO According to the best knowledge of the Board of Directors and the CEO, the financial statements are in accordance with IAS 34, Interim financial statements, as adopted by the EU and additional requirements in the Icelandic Financial Statement Act. According to the best knowledge of the Board of Directors and the CEO the financial statements give a fair view of the Group's assets, liabilities and financial position as at 31 March 2018 and the Group's operating results and changes in cash flow during the period from 1 January to 31 March Furthermore, it is the opinion of the Board of Directors and the CEO that the interim financial statements and the Endorsement by the Board of Directors for the period from January to March 2018 give a fair view of the Group's results, financial position and development and describe the main risk factors faced by the Group. The Board of Directors and the CEO have today discussed the condensed consolidated interim financial statements and confirm them by means of their signatures. Reykjavik, May 24, The Board of Directors: Jónas Þór Guðmundsson Álfheiður Ingadóttir Guðfinna Jóhanna Guðmundsdóttir Gunnar Tryggvason Jón Björn Hákonarson The CEO: Hörður Arnarson Consolidated Interim Financial Statements of Landsvirkjun, March 31,

5 Income Statement Operating revenues Power sales... Realised aluminium hedges... Transmission... Other income... Operating expenses Energy production costs... Transmission costs... Cost of general research... Other operating expenses... Operating profit Financial income and (expenses) Interest income... Interest expenses... Foreign exchange difference... Fair value changes in embedded derivatives... Fair value changes in other derivatives... Associated companies... Profit before income tax... Income tax... Net profit for the period Attributable to: Owners of the parent company... Subsidiaries minority interest... Notes ,730 98,592 ( 1,648) ( 653) 22,326 19,048 2,754 1, , ,812 35,348 34,317 16,817 12,861 2,210 2,376 12,141 10,170 66,516 59,724 74,646 59, ( 18,773) ( 15,717) ( 18,741) ( 3,815) ( 39,556) 42,555 16,879 ( 8,110) 6 ( 59,332) 15,558 ( 921) 12 14,393 74,658 ( 5,328) ( 25,277) 9,065 49,381 7,650 46,865 1,415 2,516 9,065 49,381 Notes 1 to 11 are an integral part of these interim financial statements. Consolidated Interim Financial Statements of Landsvirkjun, March 31, Amounts in USD thousandd

6 Statement of Comprehensive Income Profit for the period... Items that will not be reclassified subsequently to profit or loss: Pension obligation after income tax, change... Items that may be reclassified subsequently to profit or loss: Translation difference due to subsidiaries and associated companies... Total operating items moved to equity Total Comprehensive Income for the period... 9,065 49,381 ( 588) ( 551) 1, ,055 ( 478) 10,120 48,903 Attributable to: Owners of the parent company... Subsidiaries minority interest... 8,535 46,393 1,585 2,510 10,120 48,903 Notes 1 to 11 are an integral part of these interim financial statements. Consolidated Interim Financial Statements of Landsvirkjun, March 31, Amounts in USD thousandd

7 Balance Sheet Assets Notes Non current assets Property, plant and equipment... 3,797,484 3,810,257 Projects under construction , ,425 Developement cost , ,319 Other intangible assets... 48,331 48,413 Derivative financial instruments ,253 66,200 Associated companies... 11,278 11,778 Other non current assets Tax asset Total non current assets 4,298,495 4,299,569 Current assets Inventories... 5,718 5,625 Accounts receivables and other receivables... 71,510 66,383 Derivative financial instruments ,619 8,271 Cash and cash equivalents , ,544 Total current assets 413, ,823 Total assets 4,712,186 4,506,392 Equity and liabilities Equity Owners' contributions , ,512 Revaluation account , ,329 Restricted reserves... 11,069 10,390 Translation difference... ( 37,063) ( 38,536) Other equity... 1,224,436 1,216,571 Equity of the owners of the parent company 1,952,800 1,944,265 Minority interest , ,847 Total equity 2,072,166 2,063,112 Long term liabilities Interest bearing liabilities... Accrued pension liabilities... Deferred income tax liability... Obligation due to demolition... Prepaid income... Derivative financial instruments... Current liabilities Accounts payable and other payables... Interest bearing liabilities... Income tax payable... Derivative financial instruments ,104,042 1,889,372 43,707 40,597 87,349 91,268 8,710 8,551 3,036 3, ,189 4,110 2,248,033 2,036, ,801 93, , ,814 12,714 18, ,598 15, , ,339 Notes 1 to 11 are an integral part of these interim financial statements. Total liabilities 2,640,020 2,443,280 Total equity and liabilities 4,712,186 4,506,392 Consolidated Interim Financial Statements of Landsvirkjun, March 31, Amounts in USD thousandd

8 Statement of Equity January 1 to March 31, 2017 Equity at January 1, Translation difference... Pension obligation, change... Profit for the period... Total comprehensive profit... Share of profit of subsidiaries and associated companies... Revaluation transferred to other equity... Equity at March 31, Equity attributable to Owners' Revaluation Restricted Translation Other the owners of Minority Total contribution account reserves difference equity the company interest equity 586, ,712 1,039 (41,120) 1,138,169 1,860, ,776 1,969, (6) 73 (551) (551) 0 (551) 46,865 46,865 2,516 49, ,314 46,393 2,510 48, (191) (2,405) 2, , ,307 1,230 (41,041) 1,186,697 1,906, ,287 2,017,992 January 1 to March 31, 2018 Equity at January 1, Translation difference... Pension obligation, change... Profit for the period... Total comprehensive profit... Dividend... Share of profit of subsidiaries and associated companies... Revaluation transferred to other equity... Equity at March 31, , ,329 10,390 (38,536) 1,216,571 1,944, ,847 2,063,113 1,473 1, ,643 (588) (588) 0 (588) 7,650 7,650 1,415 9,065 1,473 7,062 8,535 1,585 10, (1,066) (1,066) 679 (679) (1,483) 1, , ,846 11,069 (37,063) 1,224,436 1,952, ,366 2,072,166 Notes 1 to 11 are an integral part of these interim financial statements. Consolidated Interim Financial Statements of Landsvirkjun, March 31, Amounts in USD thousand

9 Statement of Cash Flows Operating activities Operating profit... 74,646 59,088 Depreciation and impairment loss... 30,623 29,180 Pension obligation, change... ( 493) ( 379) Obligation due to demolition, change Other changes... ( 49) ( 1) Working capital from operation before financial items 104,885 87,987 Operating assets, change... ( 1,405) ( 1,004) Operating liabilities, change... 9,117 3,888 Cash flow from operating activities before financial items 112,597 90,871 Interest income received Interest expenses and foreign exchange difference paid... ( 27,935) ( 22,800) Taxes paid... ( 4,202) ( 2,317) Cash flow from operating activities 81,142 66,285 Investing activities Power stations in operation... ( 4,348) ( 2,561) Transmission... ( 5,952) ( 14,833) Power plant preparation cost... ( 2,320) ( 2,286) Power stations under construction... ( 27,425) ( 48,808) Purchased shares... ( 2) ( 21) Other investments... ( 2,537) ( 1,460) Assets sold Other receivables, change... ( 60) 2,200 Investing activities ( 42,582) ( 67,732) Financing activities New loans ,000 99,878 Amortisation of long term debt... ( 79,321) ( 4,121) Financing activities 160,679 95,757 Change in cash and cash equivalents... Effect of exchange difference on cash and cash equivalents... Cash and cash equivalents at the beginning of the year... Cash and cash equivalents at the end of the period ,239 94,310 2,061 2, , , , ,417 Notes 1 to 11 are an integral part of these interim financial statements. Consolidated Interim Financial Statements of Landsvirkjun, March 31, Amounts in USD thousand

10 Notes Reporting entity 1. Landsvirkjun Landsvirkjun is a partnership having its place of business in Iceland and its headquarters at Háaleitisbraut 68, Reykjavik, Iceland. Landsvirkjun operates on the basis of the Act on Landsvirkjun no. 42/1983. The Company s main objective is to engage in operations in the energy sector. The interim financial statements include the consolidated financial statements of the Company and its subsidiaries. 2. Statement of compliance The consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standard IAS 34 Interim Financial Reporting as adopted by the EU and additional requirements in the Icelandic Financial Statement Act. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended December 31, Significant accounting policies The interim financial statements are prepared using the same accounting policies as for the year 2017 except that the Group has adopted new International Accounting Standards, as adopted by the EU, for the accounting period beginning January 1, 2018, changes to the standards and new interpretations. It is management's opinion that the adoption of new, improved standards and new interpretations do not have significant effect on theses consolidated interim financial statements. The Group has not adopted new or improved standards which have been issued but have not yet taken effect. It is management's opinion that adoption of new and improved standards and interpretations which are not in effect will not have significant effects on the consolidated interim financial statements. The Group's financial statements for the year 2017 can be found on its website and the website of NASDAQ OMX Iceland; The interim financial statements are presented in USD, which is the parent Company s functional currency. Amounts are presented in USD thousand unless otherwise stated. 4. Use of estimates and judgements The preparation of interim financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. 5. Segment information Operating segments Electricity production Electricity transmission Other segments Adjustments Total Income from third party... Income within the Group... Segment income... Segment operating expenses... EBITDA... Depreciation and impairment loss... Segment earnings, EBIT... Segment assets Shares in associated companies... Total assets Segment liabilities Total liabilities ,385 22, ,162 5,159 16,063 1,274 ( 22,496) 0 123,544 38,568 1,546 ( 22,496) 141,162 ( 39,660) ( 17,483) ( 1,246) 22,496 ( 35,893) 83,884 21, ,269 ( 23,124) ( 7,256) ( 345) 102 ( 30,623) 60,760 13,829 ( 45) ,646 4,183, ,328 24,355 ( 348,868) 4,700,908 11,146 7, ( 7,870) 11,278 4,194, ,198 24,487 ( 356,738) 4,712,186 2,225, ,764 4,812 ( 101,675) 2,640,020 2,225, ,764 4,812 ( 101,675) 2,640,020 Consolidated Interim Financial Statements of Landsvirkjun, March 31, Amounts in USD thousand

11 Notes, contd.: 5. Segment information, contd.: Operating segments Income from third party... Income within the Group... Segment income... Segment operating expenses... EBITDA... Depreciation and impairment loss... Segment earnings, EBIT... Segment assets Shares in associated companies... Total assets Segment liabilities Total liabilities Electricity production Electricity transmission Other segments Adjustments Total 99,243 19, ,812 5,764 16,283 1,234 ( 23,281) 0 105,007 35,488 1,598 ( 23,281) 118,812 ( 38,161) ( 14,474) ( 1,190) 23,281 ( 30,544) 66,846 21, ,268 ( 22,129) ( 6,867) ( 287) 103 ( 29,180) 44,717 14, ,088 4,025, ,935 22,893 ( 397,731) 4,494,613 11,616 7, ( 7,367) 11,778 4,037, ,302 23,055 ( 405,098) 4,506,392 2,076, ,339 4,351 ( 151,875) 2,443,280 2,076, ,339 4,351 ( 151,875) 2,443, Financial income and (expenses) Financial income and (expenses) are specified as follows: Interest income Interest expense... Guarantee fee... Indexation... Capitalised finance cost... Total interest expense... Realised foreign exchange difference... Unrealised foreign exchange difference... Total foreign exchange difference... Fair value changes in embedded derivatives... Fair value changes in other derivatives... ( 19,164) ( 16,205) ( 1,760) ( 2,026) ( 342) ( 533) 2,493 3,047 ( 18,773) ( 15,717) 115 ( 246) ( 18,856) ( 3,569) ( 18,741) ( 3,815) ( 39,556) 42,555 16,879 ( 8,110) Financial income and (expenses) 7. Derivative financial instruments in the balance sheet: Derivative financial instruments in the balance sheet are specified as follows: Assets: Embedded derivatives in electricity agreements... Aluminium hedges... Currency swaps... Derivative financial instruments are divided as follows: Long term component of derivative agreements... Short term component of derivative agreements... Liabilities: Embedded derivatives in electricity sales agreements... Aluminium hedges... Currency swaps... Interest rate swaps... ( 59,332) 15, ,369 54,390 5,295 1,141 38,208 18,940 58,872 74,471 50,253 66,200 8,619 8,271 58,872 74,471 1, ,994 17, ,787 19,569 Consolidated Interim Financial Statements of Landsvirkjun, March 31, Amounts in USD thousand

12 Notes, contd.: 7. Derivative financial instruments in the balance sheet, contd. Derivative financial instruments are divided as follows: Long term component of derivative agreements... Short term component of derivative agreements ,189 4,110 4,598 15,459 5,787 19, Liabilities Interest bearing long term debt is specified as follows by currencies: Maturity Average Remaining Average Remaining date interest balance interest balance Liabilities in ISK % 317, % 295,793 Liabilities in CHF % 24, % 27,044 Liabilities in EUR % 406, % 392,671 Liabilities in USD % 1,616, % 1,453,678 2,365,916 2,169,186 Current maturities of long term debt... ( 261,874) ( 279,814) Total long term debt... 2,104,042 1,889,372 Interest rates on the loans range between %. Nominal interest rates for the period were on average approximately 3.5%, taking into account the state guarantee fee, same as in the full year According to loan agreements, the maturities of long term debt are as follows: Later , , , , , ,558 1,045,264 2,365, Comparison of fair value and book value Book Book value Fair value value Fair value Interest bearing long term liabilities... Fair value of other financial instruments is equal to book value. 2,365,916 2,520,680 2,169,186 2,342,525 Fair value of interest bearing liabilities is calculated by discounting the expected cash flows with the underlying currencies yield curve. Interest rates are specified as follows: Interest bearing liabilities in ISK... Interest bearing liabilities other than in ISK % % % % Consolidated Interim Financial Statements of Landsvirkjun, March 31, Amounts in USD thousand

13 Notes, contd.: 10. Fair value classification The table shows the level categorisation for items in the interim financial statements recognised at fair value Embedded derivatives... Other derivatives... Revaluation of property, plant and equipment... Shares in other companies... Level 2 Level 3 Total 13,889 13,889 6,488 32,707 39, , , , , , Embedded derivatives... Other derivatives... Revaluation of property, plant and equipment... Shares in other companies... 53,444 53,444 ( 13,228) 14,686 1, , , ( 13,228) 319, , Other matters At the annual general meeting at April 10, 2018 the payment of dividends to owners in the amount of ISK 1.5 billion or USD 15.2 million was approved. Consolidated Interim Financial Statements of Landsvirkjun, March 31, Amounts in USD thousand